ITO, Gudur v. Sri B.Durga Prasada ARao, Nellore

ITA 835/HYD/2007 | 2001-2002
Pronouncement Date: 24-12-2010 | Result: Dismissed

Appeal Details

RSA Number 83522514 RSA 2007
Assessee PAN AJNPB0650R
Bench Hyderabad
Appeal Number ITA 835/HYD/2007
Duration Of Justice 3 year(s) 5 month(s) 1 day(s)
Appellant ITO, Gudur
Respondent Sri B.Durga Prasada ARao, Nellore
Appeal Type Income Tax Appeal
Pronouncement Date 24-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 24-12-2010
Assessment Year 2001-2002
Appeal Filed On 23-07-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA.834 TO 838/HYD/2007 ASSESSMENT YEARS: 2000-01 2001-02 2002-03 2003-0 4 & 2004-05 THE ITO WARD 1 GUDUR VS SRI BALLI DURGA PRASADA RAO VENKATAGIRI. ( PAN AJNPB 0650 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E. SUNIL BABU RESPONDENT BY : NONE O R D E R PER BENCH : THESE APPEALS PREFERRED BY THE REVENUE IS DIREC TED AGAINST THE COMMON ORDER PASSED BY THE CIT(A)GUDUR DATED 21.5. 2007 AND PERTAINS TO THE ASSESSMENT YEARS 2000-01 TO 2004-05. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN I TS APPEALS IN ITA NOS.834 TO 838/H/2007: 1. THE CIT(A) HAS ERRED IN HOLDING THAT THE EXEMPTIO N U/S 10(14) (I) OF THE IT ACT IS APPLICABLE TO THE ALLOWANCES RECEIVED BY THE ASSESSEE IN HIS STATUS AS AN MLA IN ADDITION TO THE EXEMPTION AVAILABLE U/S 1 0(17)(III). 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE LA NGUAGE EMPLOYED AND THE CONDITIONS PRESCRIBED IN SECTION 10(14) (I) CLEARLY INDICATE THAT ONLY THOSE ALLOWANCES WHICH ARE OTHERWISE TAXABLE UNDER THE HE AD SALARY ARE COVERED BY THE SCOPE OF THE SAID SECTION. AS THERE IS NO E MPLOYER EMPLOYEE RELATIONSHIP BETWEEN AN MLA AND THE GOVT. AND CONSE QUENTLY AS THE SALARY AND ALLOWANCES OF AN MLA ARE CHARGEABLE TO TAX UNDE R THE HEAD INCOME FROM OTHER SOURCES THE CIT(A) OUGHT TO HAVE HELD THAT E XEMPTION U/S 10(14)(I) WOULD NOT APPLY TO THE ALLOWANCES RECEIVED BY AN ML A. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT AS NO ENFORCEABLE OBLIGATIONS/DUTIES ARE ATTACHED TO THE POSITION OF AN MLA THE SAME CANNOT BE CONSIDERED TO BE AN OFFICE AND CONSEQUENTLY TH E ALLOWANCES GRANTED TO AN MLA WOULD NOT COME WITHIN THE SCOPE OF ALLOWANCES GRANTED TO MEET ITA NO.834 TO 838/H/2007 SRI BALLI DURGA PRASAD RAO VENKATAGIRI GUDUR NELLO RE DISTT. 2 2 EXPENSES WHOLLY NECESSARILY AND EXCLUSIVELY IN THE PERFORMANCE OF DUTIES OF AS OFFICE OR EMPLOYMENT OF PROFIT COVERED BY EXEMP TION U/S 10(14)(I). 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT AS THER E IS A SPECIFIC EXEMPTION SECTION I.E. SECTION 10(17)(III) DEALING WITH THE A LLOWANCES RECEIVED BY AN MLA THE PROVISIONS OF SUCH SPECIFIC SECTION WOULD PREVAIL OVER THE PROVISIONS OF GENERAL SECTION SUCH AS SECTION 10(14 )(I). 2. AT THE TIME OF HEARING ON 13.12.2010 NONE AP PEARED ON BEHALF OF THE ASSESSEES. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THIS ISSUE. WE ARE OF THE OPINION THAT THE ISSUE INVOL VED IN THESE APPEALS ARE SQUARELY COVERED BY THE ORDER OF THIS TRIBUNAL DATE D 31.1.2006 IN CASE IN ITA NO.280 290/HYD/2007 FOR THE ASSESSMENT YEARS 2 000-01 AND 2001- 02 WHEREIN THE TRIBUNAL HELD AS FOLLOWS: 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS. TWO ISSUES ARISES FOR DETERMINATION THE FIRST BEIN G AS TO WHETHER SECTION 10(14) APPLIES IN THE CASE OF A M.L .A. THE SECOND IS AS TO WHETHER BOTH SEC.10(14) AND SECTION 10(17) WILL BE APPLICABLE SIMULTANEOUSLY IN THE CASE OF M.L.A S ECTION 10(14) READS AS UNDER: 14(I) ANY SUCH SPECIAL ALLOWANCE OR BENEFIT NOT B EING IN THE NATURE OF A PERQUISITE WITHIN THE MEANING OF CLAUSE (2) OF SECTION 17 SPECIALLY GRANTED TO MEET EXPENSES WHOLL Y NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORM ANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT AS MAY BE PRESCRIBED AND TO THE EXTENT AS MAY BE PRESCRIBED. IT COULD BE SEEN FROM THE ABOVE THAT IT APPLIES TO AN OFFICE OR EMPLOYMENT OF PROFIT. THE HONBLE AP HIGH COURT I N THE CASE OF MADDI SUDARSANAM (174 ITR 659) HAS HELD THAT THE LANGUAGE OF SECTION 10(14) WOULD CLEARLY SHOW THAT ANY SPECI AL ALLOWANCE OR BENEFIT SPECIFICALLY GRANTED TO MEET EXPENSES W HOLLY NECESSARILY AND EXCLUSIVELY INCURRED IN THE PERFORM ANCE OF DUTIES OF AN OFFICE OR AN EMPLOYMENT OF PROFIT WOUL D BE EXEMPT. THIS SECTION DOES NOT USE THE EXPRESSION OFFICE OF PROFIT. THE EXPRESSION USED IS OFFICE OR EMPLOYMENT OF PROFIT . THE EXPRESSION OF PROFIT QUALIFIES ONLY EMPLOYMENT AND DOES NOT QUALIFY OFFICE. IT WAS THEREFORE HELD BY THE H ONBLE HIGH COURT THAT IT IS ENOUGH IF A PERSON IS HOLDING AN O FFICE AND FOR THE PURPOSE OF PERFORMING THE DUTIES ASSOCIATED WIT H HIS OFFICE HE IS GRANTED ALLOWANCE OR BENEFIT SPECIFICALLY TO MEET THE ITA NO.834 TO 838/H/2007 SRI BALLI DURGA PRASAD RAO VENKATAGIRI GUDUR NELLO RE DISTT. 3 3 EXPENSES. FROM THE ABOVE IT WOULD APPEAR THAT AS A N MLA IS HOLDING AN OFFICE THOUGH NOT AN OFFICE OF PROFIT S ECTION 10(14) OF THE ACT WOULD APPLY IN SUCH A CASE. HOWEVER THE E XPENSES WHICH ARE EXEMPT ARE REQUIRED TO BE PRESCRIBED BY T HE COMPETENT AUTHORITY AND ASSESSEE IS REQUIRED TO FIL E EVIDENCE TO SHOW THAT SUCH EXPENDITURE HAS ACTUALLY BE INCURRED BY HIM. RULE 2BB(1) OF THE IT RULES READS AS UNDER: 2BB: (1) FOR THE PURPOSES OF SUB CLAUSE (I) OF CL AUSE (14) OF SECTION 10 PRESCRIBED ALLOWANCES BY WHATEVER NAME CALLED SHALL BE FOLLOWING NAMELY: A) ANY ALLOWANCE GRANTED TO MEET THE COST OF TRAVEL ON TOUR OR ON TRANSFER B) ANY ALLOWANCE WHETHER GRANTED ON TOUR OR FOR T HE PERIOD OF JOURNEY IN CONNECTION WITH TRANSFER TO M EET THE ORDINARY DAILY CHARGES INCURRED BY AN EMPLOYEE ON ACCOUNT OF ABSENCE FROM HIS NORMAL PLACE OF DUTY. C) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE IN CURRED ON CONVEYANCE IN PERFORMANCE OF DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT; PROVIDED THAT FREE CONVEYANCE IS NOT PROVIDED BY THE EMPL OYER D) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE INCURRED ON A HELPER WHERE SUCH HELPER IS ENGAGED F OR THE PERFORM ANCE OF THE DUTIES OF AN OFFICE OR EMPLOYMENT OF PROFIT; E) ANY ALLOWANCE GRANTED FOR ENCOURAGING THE ACADEM IC RESEARCH AND TRAINING PURSUITS IN EDUCATIONAL AND R ESEARCH INSTITUTIONS; F) ANY ALLOWANCE GRANTED TO MEET THE EXPENDITURE IN CURRED ON THE PURCHASE OR MAINTENANCE OF UNIFORM FOR WEAR DURING THE PERFORMANCE OF THE DUTIES OF AN OFFICE O R EMPLOYMENT OF PROFIT. EXPLANATION: FOR THE PURPOSE OF CLAUSE (A) ALLOW ANCE GRANTED TO MEET THE COST OF TRAVEL ON TRANSFER INC LUDES ANY SUM PAID IN CONNECTION WITH TRANSFER PACKING A ND TRANSPORTATION OF PERSONAL EFFECTS ON SUCH TRANSFER . ITA NO.834 TO 838/H/2007 SRI BALLI DURGA PRASAD RAO VENKATAGIRI GUDUR NELLO RE DISTT. 4 4 THUS ANY EXPENDITURE FALLING WITHIN RULE 2BB(1) WI LL BE COVERED U/S 10(14) OF THE ACT. HOWEVER IN THE PRESENT CAS E THERE IS A CLEAR FINDING BY THE CIT(A) IN PARA 4(E) THAT THE A SSESSEE HAS NOT FULFILLED THE CONDITION THAT THE ENTIRE AMOUNT OF V ARIOUS ALLOWANCES RECEIVED BY THE ASSESSEE WERE ACTUALLY I NCURRED WHOLLY NECESSARILY AND EXCLUSIVELY FOR THE PURPOSE OF HIS DUTIES. NO DOCUMENTARY EVIDENCE HAS BEEN FILED EITHER BEFOR E THE ASSESSING OFFICER OR DURING THE APPELLATE PROCEEDIN GS BEFORE THE CIT(A) TO SHOW THAT THE AMOUNT OF EXPENSES WAS ACTU ALLY INCURRED BY THE ASSESSEE. THE RIGORS OF SECTION 10 (14) HAS ALSO NOT BEEN REDUCED BY THE CBDT BY ISSUING ANY BENEFIC IAL CIRCULAR APPLICABLE TO PRESENT CASE. IN VIEW OF THE MATTER WE HOLD THAT THE APPELLANT IS NOT ENTITLED TO EXEMPTION U/S 10(1 4)(I) OF THE ACT OF THOSE EXPENSES WHICH ARE COVERED AS PER RULE 2BB(1) OF THE IT RULES. 6.1. AS COULD BE SEEN FROM SECTION 10(14)(I) AND S ECTION 10(17) THE ITEMS DEALT IN THE ABOVE SECTIONS ARE MUTUALLY EXCLUSIVE. IT CAN BE SEEN THAT IN THE PRESENT CASE ONLY SECTION 1 0(17)(III) IS APPLICABLE. AS PER SECTION 10(17)(III) THE ALLOWA NCE NOT EXCEEDING RS.2 000/- PER MONTH IS ALLOWABLE IN THE CASE OF A MEMBER OF ANY STATE LEGISLATURE AS NOTIFIED BY THE CENTRAL GOVT. A COMBINED READING OF SUB SECTION (I) (II) AND (II I) OF SECTION 10(17) WOULD MAKE IT CLEAR THAT THIS SECTION IS BRO UGHT IN ONLY TO DEAL WITH CERTAIN SPECIAL ALLOWANCES OTHER THAN THE NORMAL ALLOWANCES WHICH ARE ALLOWED TO A MEMBER OF PARLIAM ENT OR A MEMBER OF STATE LEGISLATIVE ASSEMBLY WHICH MAY BE C OVERED BY OTHER SECTIONS OF THE ACT. IT IS ABSURD TO THINK THAT AN ALLOWANCE OF RS.2 000/- PER MONTH WILL ALSO INCLUDE HOUSE RENT ALLOWANCE TRAVELLING AND CONVEYANCE ALLOWANCE ETC. IN THIS VIEW OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT IN THE CASE OF A MLA OF THE STATE BOTH SECTIONS 10(14) AN D 10(17) (III) WILL BE APPLICABLE. 6.2. IN THE FACTS OF THE ASSESSEES CASE AND IN VI EW OF THE FOREGOING DISCUSSION WE HOLD THAT THE ALLOWANCE RE CEIVED BY THE ASSESSEE ARE TAXABLE AND THAT ONLY AN EXEMPTION OF RS.2 000/- PER MONTH CAN BE ALLOWED AS PER SECTION 10(17(III) OF THE ACT. THUS WE UPHOLD THE ORDER OF THE LEARNED CIT(A) TO THE ABOVE EXTENT. 3. SINCE THE FACTS OF THE PRESENT CASES ARE SIMI LAR TO THAT CONSIDERED BY THE TRIBUNAL IN THE ABOVE CASES WE A RE INCLINED TO HOLD THAT THE CIT(A) IS JUSTIFIED IN FOLLOWING THE ORDER OF T HIS TRIBUNAL CITED SUPRA. ITA NO.834 TO 838/H/2007 SRI BALLI DURGA PRASAD RAO VENKATAGIRI GUDUR NELLO RE DISTT. 5 5 RESPECTFULLY FOLLOWING THE SAME RATIO LAID DOWN IN THE ABOVE ORDER OF THIS TRIBUNAL WE DISMISS THE GROUND TAKEN BY THE REVENU E. 4. IN THE RESULT THE APPEALS OF THE REVENUE IN ITA NOS.834 TO 838/HYD/2007 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 24.12.2010 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 24 TH DECEMBER 2010 COPY FORWARDED TO: 1. THE ITO WARD 1-GUDUR NELLORE DISTRICT-524 101 2. SHRI BALLI DURGA PRASAD RAO 8-300-301 KARNAKAM MA ST. VENKATAGIRI NELLORE DISTRICT. 3. CIT(A)-GUDUR NELLORE DISTRICT. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP